How to Be Organized with Your Business Taxes in the Philippines

How can you organize your business taxes in the Philippines?

Go paperless

Compile your receipts and invoices

Set up a bank account for paying taxes

Keep track of all your payment dates

Many Filipino freelancers and entrepreneurs often find it difficult to organize their business taxes in the Philippines. Even with an online tax calculator, they might find the process quite tedious. However, one must push through with it, especially since it can help you pay your taxes on time. Remember, missing your tax filing deadline may lead to heavy fines.

Taking steps to avoid disorganization and untidiness with your tax documents should assist you in bookkeeping. Listed below are some things you can do to be organized with your business taxes.

Go paperless

An important part of filing and paying your taxes is regularly updating your BIR registered account books. Your books will contain important financial statements, entries, and transactions. These will include your assets, expenses, sales, etc. You can go back to these books to check if you are filing the right tax returns. Additionally, BIR might look into them to see if you are paying correctly.

With technology today, many find it easier to keep their books digitally. They believe that it is faster to keep track of their bookkeeping if they can access it from their smartphones or laptop. There is also less chance for you to lose them or mix them up with other documents in your filing cabinet.

If you are choosing to store your accounts digitally, you must register using the BIR Form 1900. It will grant you the authority to use a computerized accounting system. The next thing you must do is find a suitable system that will track your transactions. Better yet, you may want to check out Taxumo, a “paperless” multi-awarded online tax platform, for its Taxumo Pro feature – that lets self-employed professionals and small businesses automate their bookkeeping online. Afterward, the BIR will audit your computer system to collect your books.

Be consistent with your receipts and invoices

Your official receipts and invoices will act as proof for the transactions you made with a customer or a client. You can always use them as references when calculating your taxes with the help of an online tax calculator in the Philippines. By doing so, you can be sure that you are declaring the correct amount.

Keep in mind that forgetting to issue them properly due to carelessness, disorganization, or other reasons may lead to penalties. Depending on the severity of your offense, you may end up paying from P10,000 to P50,000.

Set up a bank account for paying taxes

Setting up a separate bank account is one sure way for you to be organized about your business taxes in the Philippines. By doing so, you are lessening the risk of forgetting to save up money to pay for your taxes. If you have a bank account set up for this, you can easily deposit your money into the account, move on, and withdraw from it when needed. This will come in handy whether you are a business owner or a freelancer.

Tip: A good rule of thumb when it comes to saving money to pay for your taxes is setting aside 15%-30% of your profits.

Keep track of all payment dates

Being late when it comes to paying your business taxes in the Philippines may result in heavy fines. Therefore, you should keep track of the common tax payment dates mandated by the government. Below are the different types of business taxes and their specific payment dates.

Income Tax – for those who are earning P250,000 to P400,000 annually.

April 15 (if you are paying annually)

May 15, August 15, and November 15 (if you choose to pay quarterly)

VAT (Value-Added Tax) – for business owners who specialize in selling goods or services.

The 20th day of every month (if you choose to pay monthly)

The 25th day of the month right after the quarter (if you decide to pay quarterly)

Percentage Tax – for brands that are non-VAT taxpayers.

The 20th day of every month (if you choose to pay monthly)

The 25th day of April, July, and October (if you choose to pay quarterly)

Withholding Tax – for businesses that hire employees and contractors.

The 10th day of every month (this is deducted from the salaries of employees; employers deduct this amount and pay it directly to the BIR)

Key Takeaway

Being disorganized with your business taxes may lead to problems such as paying your taxes late and receiving heavy fines. Avoid them by taking measures to be more organized in your taxes. You can start by following the tips listed above.

Author Evan Tan

Evan Tan is the Chief Marketing Officer of Taxumo. He is a communications professional with over a decade of local and regional professional experience. He also is a founding member of the Philippine LGBT Chamber of Commerce. Apart from his work and advocacy, he is passionate about traveling, working out, reading good books, and discovering vegan restaurants in and out of the country.